DEAR BOB: With home-sale market conditions such as they are and the extended market times needed to sell a correctly priced residence, do you still believe a 90-day listing is in the best interest of either the seller or the Realtor? With the absorption rate in the six- to eight-month range, do you think it would justify spending marketing dollars on properties that statistically have no chance of selling? –Jack McC.
DEAR JACK: You sound like a Realtor. But I hope you are not just an average Realtor who might take six months to sell a home in a slow market. Days on the market for sale are just averages.
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Many correctly priced, aggressively marketed houses and condos sell in 30 to 60 days. Of course, if the seller insists on getting last year’s price for his or her home today, it will take many months or the home might not sell at all.
The key reason for recommending a 90-day listing is to protect the home seller from getting stuck with a bad agent. I know it’s hard to believe, but there are some “duds” out there.
A 90-day listing puts pressure on the listing agent to aggressively market the home instead of sitting back and hoping it sells through the MLS (multiple listing service) or on the Internet at www.Realtor.com.
When the listing agent is doing a good job, the seller is satisfied, and if the home is unsold after 90 days, the seller can renew the listing for an additional 30 days at a time.
ADVANCED AGE PROVIDES NO ADDITIONAL HOME SELLER BENEFITS
DEAR BOB: My husband’s 85-year-old mother is planning on selling her home. It is worth about $560,000. Since she is widowed, she is entitled only to the $250,000 principal-residence-sale tax exemption. Even at her age, will the IRS consider the excess gain as taxable? –Patricia J.
DEAR PATRICIA: You are correct your mother-in-law’s advanced age does not give her any extra home seller tax benefits.
However, you left out the key fact of her adjusted cost basis for her house. I’m sure it is not zero, as you seem to presume. When her late husband died, she presumably received a full or partial stepped-up basis to market value on the date of his death.
Let’s suppose her adjusted cost basis is $200,000. Subtracting that from her estimated $560,000 net sales price means her capital gain is $360,000. Presuming she owned and lived in her principal residence at least 24 of the last 60 months before the sale, subtracting her $250,000 Internal Revenue Code 121 exemption means she has only a $110,000 taxable long-term capital gain. For full details, she should consult her tax adviser.
SELL OR REFINANCE TO PRESERVE HOME EQUITY
DEAR BOB: Our nanny purchased a house last year with her husband’s uncle. The uncle is four months behind on the mortgage payments and has left the country because he is wanted by the police on an unrelated matter. The bank initiated foreclosure. But it refuses to deal with my nanny since her name is not on the mortgage. What can she do to avoid foreclosure and get the down payment back? –Kathryn S.
DEAR KATHRYN: Your nanny should sell or refinance the property to preserve her home equity and the down-payment amount. She should obtain a signed and notarized power of attorney form from the missing uncle so she can list and sell the property. For details, she should consult a local real estate attorney.
The new Robert Bruss special report, “Everything You Need to Know About Reverse Mortgage Pros and Cons for Senior Citizen Homeowners,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
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